Hammond set to discuss BAE merger

Written By Unknown on Selasa, 09 Oktober 2012 | 15.36

9 October 2012 Last updated at 02:10 ET

The defence secretary is to discuss a proposed merger between BAE and EADS with his French and German counterparts at a Nato meeting in Brussels later.

The firms are deciding whether to ask for an extension to Wednesday's stock exchange deadline for them to announce whether the deal will go ahead.

On Monday, Philip Hammond said he did not think there was any chance the deal would be settled by the deadline.

The merger would create a powerful defence and aerospace giant.

The British and Americans are both insisting that the French and German governments reduce their stakes in EADS.

At a fringe meeting at the Conservative Party conference in Birmingham on Monday night, a senior BAE Systems executive, Nigel Whitehead, made it clear he shared that goal and understood the need to ensure Britain's national security interests were protected.

On Monday, Mr Hammond said he did not think there was any chance of getting a deal done by the stock exchange deadline on Wednesday, but it was up to the two companies to decide whether to ask for an extension.

Meanwhile, BAE's largest shareholder, fund manager Invesco Perpetual, said on Monday that it had "significant reservations" about the proposed merger, and "does not understand the strategic logic" of the deal.

Invesco, which owns 13.3% of BAE, does not appear to be alone. More than 30% of the UK firm's shareholders have expressed qualms, the Financial Times reported on Tuesday.

Defence markets

Ministers believe there are potential benefits to the merger which could open up new defence markets.

But unless they are satisfied that national security and the relationship with the US are protected, they could still block the deal.

The two companies announced they were in discussions over a possible merger on 12 September.

But since then both BAE and EADS, which is largely controlled by the French and German governments, have denied reports that the talks are in trouble.

On Friday evening, 45 Conservative MPs wrote to the prime minister voicing concerns over the planned deal, saying it would hand the bulk of Britain's defence industry to a company which would not safeguard UK interests.

Earlier, Chancellor George Osborne said the proposed $45bn (£28bn) merger must ensure British security and jobs are preserved.

EADS boss Tom Enders has previously urged politicians not to interfere in the proposed deal.


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